Freightways Q1 earnings up 43% on express package rebound

Freightways chief executive Mark Troughear. Photo / Supplied

Express package company Freightways has reported a sharp lift in turnover and earnings for the first quarter of its financial year, with its net profit rising by 43 per cent to $19.2 million.

However, chief executive Mark Troughear said the outlook for the full year to June 30 was uncertain.

Freightways said the onset of the Covid-19 pandemic, and the first lockdowns in New Zealand and Australia, had initially led to a sharp decline of revenue across the group in April.

Chairman Mark Verbiest said the annual result included close to $16m of wage subsidies received by some of its businesses in New Zealand and Australia.

"These subsidies were used to maintain staff employed during the significant drop in activity observed from April 2020 financial year to June 30,"

Activity has been strong during the first quarter of the 2021 financial year, with revenue increasing by 35 per cent compared to the same period last year to $211.7m, and ebita increasing by 49 per cent to $34.8m.

"It should be noted that the first quarter of the last financial year was relatively soft, with low levels of organic growth," the company said in material prepared for today's annual meeting.

The latest result also included Big Chill Distribution which did not form part of the Freightways group in the 2020 year, as well as the impact of one extra week in the first quarter of 2021 compared to the first quarter of 2020.

The impact of the extra week was $12.4m of revenue and $2.1m of ebita.

Freightways said volume at Its express package and business mail business continued to trade well ahead of the same period last year, reflecting an increase in the number of companies now providing an online offering, as well as market share gains across the division.

Overall revenue across the division - which includes Big Chill - was up 46 per cent against the same period last year, at $168m.

On the information management side, businesses in New Zealand and Australia generally remained impacted by some of the trends linked to the Covid-19 pandemic, and particularly the fact that many companies across New Zealand and Australia still have part of their workforce working from home.

Where Covid-19 related restrictions have been eased there had been an improvement in activity.

Medical waste operations in Australia experienced significant growth although the company said it expected that to moderate as the situation in Victoria improved.

New activity, be it in digitisation or medical waste, together with effective cost control have led to an improvement in margins in first quarter 2021, with EBITA up 33 per cent to $7.9m.

Looking ahead, Troughear said: "Whilst we are encouraged by the strong trading results achieved in the first quarter of 2021, which reflect improved margin, organic growth and market share gains in our businesses, the future economic environment remains highly uncertain."

Freightways shares last traded at $8.45, up 20c.